Indiegogo Makes a Push to Court Nonprofits

Kickstarter is the reigning king of crowdfunding, but its smaller rival is working overtime to roll out products aimed at expanding its customer base.

San Francisco-based Indiegogo today unveiled a new program on its crowdfunding platform called Generosity by Indiegogo, which allows nonprofits to forego the 5 percent service fee the platform typically charges.

While the move is a win for nonprofits, it’s also a way for Indiegogo to further differentiate from Brooklyn, N.Y.-based Kickstarter. Kickstarter has always been laser-focused in its commitment to being the crowdfunding platform for creators, so it doesn’t allow campaigns raising money for charity. That doesn’t mean nonprofits are barred from raising money on Kickstarter, but the money has to be used for something that is being created. For example, The Lowline raised nearly $224,000 to be put toward the creation of an underground park in an abandoned New York City subway terminal.

To be sure, while there is marketing milage in positioning yourself as the crowdfunding platform for nonprofits and individuals in duress, it’s also expensive. Essentially, Indiegogo is eating the costs of maintaining and running the crowdfunding campaigns of nonprofits that opt to use the platform. Indiegogo declined to comment on revenues or what portion of current revenue comes from these cause-based campaigns.

The company hopes that, when someone makes a donation, they will leave a “tip.” Indiegogo Life automatically tacked on a 15 percent “tip” to your donation but left users the option of editing or deleting that tip. Generosity by Indiegogo has a similar tip option. The revenue from those tips, in addition to revenues from other parts of Indiegogo’s business, make it possible for Indiegogo to offer the fee-free option.

Indiegogo co-founder Slava Rubin says consumers’ positive reception of Indiegogo Life was a motivating factor in launching Generosity by Indiegogo. “We have seen a significant increase in the use of Indiegogo Life and people using Indiegogo for their personal fundraisers so we have had a lot of requests and thinking around nonprofits and we are excited to be able to open up Indiegogo Life to nonprofits,” he says.